On October 17–18, I had the pleasure of taking part as an invited attendee in the 3rd Conference on Geoeconomics in Berlin. The conference was presented by CEPR—the organization where I started my career as an economics editor 14 years ago—and the Kiel Institute for the World Economy and hosted by the German Federal Ministry of Economic Affairs and Climate Action. At Standard Error, part of our job as editors is to attend conference around the world to grow awareness of our services and to cultivate our expertise at the frontier of the fields in which our clients conduct research. On both counts, our participation in the 3rd Conference on Geoconomics proved a resounding success.

Geoeconomics is an emerging field of research in economics. It aims to characterize our current geopolitical moment of competitive economic statecraft by the United States and China and to analyze its implications for allied and connector countries in and between the geopolitical spheres of each. In 2023, CEPR partnered with the Kiel Institute to launch its Geoeconomics Research Policy Network, led by Moritz Schularick (Kiel Institute, Sciences Po, Bonn), with the NBER following suit this past summer with its inaugural workshop on International Economics and Geopolitics at the Summer Institute. The Berlin conference moved this new research field forward by bringing together in a structured and intentional way politicians, policymakers, and members of the press and civil society with researchers working at the cutting edge of geoeconomics—to provocative effect. 

At the event, a scintillating roster of international researchers examined geoeconomic issues and the implications of US and Chinese economic statecraft for investment, production, efficiency, welfare, and distribution from perspectives ranging from the firm to the domestic and international macroeconomic levels. Chenying Yang of Singapore Management University presented work with coauthors that models the plant location decisions of firms in the battery electric vehicle (BEV) supply chain seeking to benefit from subsidies with local content restrictions. Dalia Marin of TU Munich and Hamid Farooz of Rochester presented research examining how macro and trade uncertainty shape firms’ automation and robotization investment incentives and the corresponding consequences for reshoring.

At the macro level, the research of Thierry Mayer of Sciences Po and Şebnem Kalemli-Özcan of Brown investigates how decoupling in the service of so-called economic security can have perverse effects on macroeconomic performance and the likelihood of “hot” geopolitical conflict. Gernot Müller of Tübingen and coauthors turn their attention to the distributional consequences of hot conflicts, applying a heterogeneous agent New Keynesian model to new historical data to look at the effects of war on income and wealth inequality. They find stark leveling effects. In provocative work that fully justifies his receipt of the Kiel Institute 2021 Excellence Award, Jesse Schreger of Columbia formalizes the components of a theory of hegemonic power and economic coercion from the perspective of third countries considering anticoercion policies.

The Berlin conference moved this new research field forward by bringing together in a structured and intentional way politicians, policymakers, and members of the press and civil society with researchers working at the cutting edge of geoeconomics—to provocative effect.

In other innovative works, Diana Van Patten of Yale was among the winners of this year’s Excellence Award in part for her work marshalling an impressive collection of individual-level datasets to show how migrants transmit demand information through transnational networks, highlighting gains from trade that researchers are only beginning to identify and quantify and characterizing yet another margin along which fragmentation might impact consumer welfare and trade costs. Prashant Garg of Imperial College presented a long-term project in which he and his coauthors have used a large language model (LLM) to describe and map industrial production networks and offered a great deal of granular insight on strategies researchers can use to validate the outputs of these latest-generation probabilistic models to build new datasets.

The researchers brought the intellectual raw material and conceptual frameworks to articulate the problems states are facing—but the unique contribution of the Berlin conference is that it also gave a platform to states themselves to describe their geoeconomic priorities and objectives in their terms. Notably, Robert Habeck, Germany’s Vice Chancellor and Minister for Economic Affairs and Climate Action, conveyed some of the current sense of political dismay in Germany. An export-oriented open economy with close connections to China, Germany finds itself caught in the middle of the US–China tit-for-tat over the BEV supply chain and consumer market precisely at the moment when EU climate commitments begin to bite hard. The country is also experiencing a generalized sense of insecurity during this third year of Russia’s war on Ukraine, which brought the German economy to a precipice over its dependence on Russian energy imports from which it successfully managed to scramble back, albeit shaken. Last but not least, anxieties in Europe over the US presidential election are acute, with the reigning hegemon’s strategic and material commitments to its NATO allies hanging in the balance.

Speaking on behalf of this hegemon was Chad Bown, the Peterson Institute policy economist recently turned chief economist of the US Department of State. The loquacious former “Trade Talks” podcaster, in his new tighter-lipped iteration, dutifully emphasized the US’s concern with protecting its strategic supply chains from exposure to national security threats and its commitment to doing so through industrial policies until recently deemed verboten, such as tariffs, local content restrictions, and deployment of the national security exception in WTO dispute settlements. (He noted in a wry aside that he was asked on recent visit to China whether the US can indeed be classified as a “market economy.”) Bown’s former superior Adam Posen, president of the Peterson Institute, was able to be franker in his qualms over the US’s current penchant for trade restrictions, arguing that “economic security” is neither well defined nor clearly enhanced by the country’s new protectionist bent. Also in attendance were Vera Thorstensen of São Paulo’s Fundação Getulio Vargas, who voiced developing countries’ concerns over being pressured to align with one or the other of the competing powers, and Angela Ellard, deputy director-general of the WTO, who emphasized that until recently WTO members tacitly saw invocation of the national security exception as the “nuclear option.” 

The prestigious event marked a unique opportunity for Standard Error to refine our expertise at the frontier of an emerging research field and to share in conversations certain to shape world history in the near term.

Finally, IMF chief economist Pierre-Olivier Gourinchas brought the bird’s-eye view from international organizations on global trade imbalances. He also presented the Kiel Institute’s prestigious Bernhard Harms Prize, whose latest recipient was his own current IMF colleague Gita Gopinath, to his former colleague Hélène Rey of London Business School for her work on the international transmission of US monetary policy.

In short, the prestigious event marked a unique opportunity for Standard Error to refine our expertise at the frontier of an emerging research field and to share in conversations certain to shape world history in the near term. I look forward to bringing these insights to bear for the benefit of the researchers who work with us over the coming years of research ferment in geoeconomics.